OCT. 10 2016 (The Conway Bulletin) – After seven months of deflation, some prices in Armenia have started to rise, the Statistics Committee said. Food prices decreased marginally, but non-food items and the service sectors registered inflation of around 1%.
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(News report from Issue No. 300, published on Oct. 14 2016)
OCT. 11 2016 (The Conway Bulletin) — Ardshinbank, one of Armenia’s top- three banks, bought Areximbank from Gazprombank, the financial arm of Russia’s giant gas company, for an undisclosed amount.
Areximbank was Armenia’s fifth- largest bank, according to local media and the buy-out will push Ardshinbank towards becoming the largest bank in Armenia. Its assets will grow by 20% to around 540b dram ($1.1b) after the deal. Karen Safaryan, a Russian billionaire businessman with Armenian roots, founded Ardshinbank in 2003 and remains its beneficial owner.
Analysts said that US sanctions against Gazprom and its subsidiaries and Armenian Central Bank requirements for commercial banks could be behind the buy-out.
In 2014, the Central Bank ordered banks to increase their minimum capital requirements by six times to 30b dram ($63m) by January 2017. The rule has prompted a round of mergers.
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(News report from Issue No. 300, published on Oct. 14 2016)
OCT. 4 2016 (The Conway Bulletin) – In a third and final reading, Armenia’s parliament approved a controversial new tax code that has been in the works for two years. The new code will reduce the income tax bracket for most of Armenia’s working population, liberalise VAT and tax dividends. Critics of the reform have said that the new tax code will push Armenia into a recession.
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(News report from Issue No. 299, published on Oct. 7 2016)
OCT. 7 2016 (The Conway Bulletin) — Central Banks across Central Asia and the South Caucasus seem to have switched off their crisis mode, as inflation slows, oil prices pick up and remittances begin to regenerate.
Excited about the imminent re-start of the Kashagan offshore oil project, Kazakhstan is looking stronger, after months of uncertainty regarding its currency and its budget stability.
An important sign of the country’s recovering health was the rate cut by Kazakhstan’s Central Bank this week, which said that with inflation back into the 6 – 8% band that it was targeting and that monetary policy could be eased.
This decision has been in the Central Banker’s thinking over the past few weeks. That much is clear. Daniyar Akishev has been showing, for the first time, a more confident and determined tone.
And countries less impacted by oil prices, from Armenia to Kyrgyzstan, have also tried to boost their rather slow economic activity by lowering or keeping low interest rates in the past weeks.
All currencies from the region have been hit by a stronger US dollar over the past two years, and their depreciation led inevitably to a sharp increase in consumer prices.
Some — such as Azerbaijan, Kazakhstan, Kyrgyzstan and Georgia — needed strong monetary interventions. Others, such as Tajikistan, Armenia and Uzbekistan stabilised at a comparatively faster pace.
Last month, Russia’s Central Bank said migrant worker remittances to Kyrgyzstan had increased by 21%, reflecting a higher migration rate. On the other hand remittances to Tajikistan and Uzbekistan fell because of a drop in the number of migrants. Perhaps this is the Eurasian Economic Union effect?
Kyrgyzstan and Tajikistan are among the top remittance-dependent countries in the world.
As the ship seems steadier, however, countries across the region will have to cope with more domestic problems, chiefly in the banking sector and other private sectors hit hard by the economic downturn.
As shown this week with the bankruptcy of Bank Standard, Azerbaijan’s financial sector doesn’t seem to have fully recovered from the crisis. And in western Kazakhstan, where oil is the job creator, a month-long strike just ended with the workers obtaining higher salaries and the company winning state tenders. There is still work to do.
By Paolo Sorbello, Deputy editor, The Conway Bulletin
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(News report from Issue No. 299, published on Oct. 7 2016)
OCT. 4 2016 (The Conway Bulletin) – Armenia’s Statistics Committee said that trade turnover improved during the first eight months of the year, compared to last year. Exports increased by 19% to $1.1b, while imports decreased by 2% to just below $2b, reducing the country’s trade deficit. Trade with CIS countries increased, while it remained flat with EU countries.
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(News report from Issue No. 299, published on Oct. 7 2016)
SEPT. 24 2016 (The Conway Bulletin) – Armenia’s new PM Karen Karapetyan named Shushan Sardaryan, ex- press secretary of Gazprom Armenia, as an advisor. Previously, Mr Karapetyan served as the director of Gazprom Armenia, the Russian gas giant’s Armenian subsidiary.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 27 2016 (The Conway Bulletin) – Armenia will decide within the next two years what to replace the Metsamor Nuclear Power Plant with when they decommission it in 2026, media reported quoting government officials. Metsamor, which lies 30km from Yerevan is controversial. It supplies 40% of Armenia’s power but the EU and the US want it closed down because they say it is a safety risk.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 27 2016 (The Conway Bulletin) – Armenia’s Central Bank cut interest rates by 50 basis points to 6.75%, in an effort to combat deflation. The Bank said that after a positive first half, the economy slowed significantly in Q3. This is the sixth time this year that the Central Bank has cut interest rates. At the beginning of 2016, interest rates stood at 8.75%.
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(News report from Issue No. 298, published on Sept. 30 2016)
SEPT. 23 2016 (The Conway Bulletin) – >> Economic stagnation, an unpopular president, a new PM and demonstrations over the summer in favour of a group of gunmen who captured a police station. Is Armenian in something of a crises?
>> You could certainly say that. It’s been a torrid 12 months for President Serzh Sargsyan, starting with demonstrations in the summer of 2015 against proposed electricity price rises. The government said that it had to introduce price rises to counter a fall in the value of the Armenian dram and a general economic downturn. Ordinary people, though, clearly weren’t prepared to stomach the price rise. They took to the streets and faced down the police, forcing the Armenian government to drop its price increase. The incident damaged Sargsyan and the then PM Hovik Abrahamian.
Since then, though, things have gotten worse. The economic just hasn’t picked up. There’s been something of a dead cat bounce in Armenia. It just hasn’t lifted and people are getting frustrated. This and the botched handling of the siege and hostage scenario at a police station in the capital in July contributed to Abrahamian having to quit as PM. He had only been in the job for two years.
Don’t forget, too, fighting in the Armenia-controlled region of Nagorno-Karabakh in April when Azerbaijan rolled in its tanks. The outbreak of fighting appeared to take the Armenia’s leadership by surprise, again embarrassing Sargsyan.
>> And how has this impacted Sargsyan?
>> His authority has definitely been affected. Sargsyan has never been wildly popular among ordinary Armenians. He’s won a couple of elections but both have been disputed and turnouts have been modest. In 2008, when he won his first presidential election, police shot dead at least 15 protesters after anti-Sargsyan protesters had taken over the main squares in Yerevan for a couple of weeks. Part of Sargsyan’s problem is an image problem. He comes across as cold and aloof. His power base is also centred on Nagorno-Karabakh, where he is from, and people suspect that he favours this clique. He’s certainly enriched his family and friends as president. The recent turmoil, and especially the stagnant economy, will only undermine his standing further.
>> Does this mean that Armenia’s opposition have a chance of taking over?
>> It’ll be very difficult for them. Sargsyan has the power of the Republican Party behind him. This is a formidable election machine as was shown in regional election when despite all the problems it still won just over half the local elections held on Sept. 18. Still, there was a wobble. The Republican Party lost 30 of these local elections, considered a blow to its prestige and clout.
>> And the new PM, Karen Karapetyan, how does he feed into all this?
>> Karapetyan is seasoned operator. He used to be the mayor of Yerevan, one of the most high profile jobs in the country, and was also an executive at the local branch of Gazprom. This means that he is already well- known to Russian officials, very important to Armenia which relies on Russia as one of its few allies.
His brother is Samvel who is one of the richest Armenians. He owns a property empire in Moscow and last year rode to the rescue of the Armenian government by buying the national electricity distribution company after the government backed down from angry protesters who didn’t want to pay a price rise.
The appointment of Karapetyan, puts his family at the centre of Armenian politics. This is the power duo to watch in Armenia. Sargsyan, who is eligible to run in a presidential election set for 2018, is increasingly reliant on the Karapetyans.
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(News report from Issue No. 297, published on Sept. 23 2016)
SEPT. 20 2016 (The Conway Bulletin) – Money transfers from migrant workers in Russia to Central Asia and the South Caucasus fell by 12% in Q2 2016 to $2.3b compared to a year ago. Importantly, remittances to Armenia and Uzbekistan fell by 30% and 20% respectively, compared to the same period last year. Kyrgyzstan was the only country which received more than last year, $487m, a 21% increase. Remittances from migrant workers in Russia form a vital part of the economy for non-energy exporters in the region.
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(News report from Issue No. 297, published on Sept. 23 2016)
